Real wage growth moderate in 2017, as inflation turns positive

As inflation turned positive, real wages increased only at a moderated pace in 2017, according to “Report on Wage Practices 2017” released by the Manpower Research and Statistics Department, Ministry of Manpower.

This was despite the fact that a larger proportion of establishments raised wages. More employees also received wage increases, and nominal wage increase was higher than the year before.

Nominal total wages (including employer CPF contributions) in the private sector grew by 3.8 percent in 2017, higher than the 3.1 percent in 2016.

However, after accounting for the change in inflation from -0.5 percent in 2016 to 0.6 percent in 2017, real total wage growth was 3.2 percent in 2017, slightly lower than the 3.6 percent in 2016.

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In most industries, nominal total wage growth in 2017 was maintained at or higher than last year’s levels. The exceptions were transportation & storage, administrative & support and real estate.

The proportion of profitable establishments rose in industries such as infocomm, and wholesale & retail trade. However, a decline was observed in community, social & personal services and construction.

Overall, this led to an increase in the proportion of employees who worked in profitable establishments. There were also more employees in profitable establishments that performed as well or better than last year.

Correspondingly, more establishments raised their employees’ total wages in 2017 (65 percent) compared to 2016 (58 percent). The proportion of establishments that cut total wages also fell, from 17 percent in 2016 to 12 percent in 2017.

The proportion of employees who received wage cuts decreased from 13 percent in 2016 to 10 percent in 2017. The average wage cut for them was lower in 2017 (-3.9 percent) compared to 2016 (-5.0 percent).